HM Revenue & Customs (HMRC) has officially confirmed it will appeal a landmark tax tribunal ruling that would cut the VAT rate for public charging to 5%.

The decision from the UK’s tax authorities, reported in The Guardian, comes after the First-tier Tribunal ruled in February that public EV charging should be charged at the domestic rate of 5% as opposed to the current rate of 20%.

The tax chamber found that Charge My Street’s model of providing accessible, community-based EV charging met the criteria for the reduced VAT rate previously reserved for domestic electricity supplies.

The case had offered hope that the longstanding VAT disparity between public and home charging would finally be addressed, bringing equality for the c.40% of UK households that do not have a driveway or off-street parking which leaves them reliant on public charging.

In a statement, an HMRC spokesperson said: “We’re appealing this case, as our position is that standard-rate VAT applies to electricity supplied through public EV charging infrastructure.”

Industry leaders and campaign groups such as FairCharge have reacted with “staggered” disappointment, accusing the Government of maintaining a regressive tax structure that penalises UK households who cannot charge at home.

Domestic electricity in the UK attracts a 5% VAT rate. Public EV charge points are subject to the full 20% rate, meaning drivers who rely on public infrastructure – typically those without access to off-street parking – face a structural cost disadvantage compared to those who can charge at home.

The First-Tier Tribunal’s ruling in the Charge My Street v HMRC case found that electricity supplied at public charge points, under certain consumption limits, can be treated as domestic use and taxed accordingly.

The case centred on whether the Charge My Street operations – which provide accessible, community-based EV charging – should fall under the ‘de minimis’ provisions that allow a 5% VAT rate on small-scale supplies of electricity supplied for domestic consumption.

Deloitte, which represented Charge My Street, drew on existing VAT law that already says the provision of less than 1,000kWh per month of electricity to a person at any particular premises counts as “domestic”.

While legally binding only for Charge My Street, this ruling has prompted other operators to prepare historic VAT reclamation claims if an appeal fails.

The Government’s decision to appeal means that the millions of drivers who rely on public charge points will continue to face VAT at 20%, four times the 5% rate paid by those who charge at home.

Will Maden, director at Charge My Street, said EV adoption should be made as affordable as possible.

“My personal view is I think we should be making the transition to EVs as cheap as we can. This is an environmental issue,” he commented.

Charging section reaction to a “disjointed and disappointing decision”

The decision by the UK’s tax authorities has also sparked furore across the UK charging sector.

ChargeUK, the trade association representing UK charge point operators, said it was a “disjointed and disappointing decision”.

Vicky Read, chief executive of the business group, said: “On the same day it commits to doubling down on clean power and electrification, HMRC appeals against a legal ruling which could cut the cost of EV charging for millions.

“Interest in EVs is surging as drivers look to shield themselves from volatile petrol prices. But for the many who cannot charge at home that equation is still not straightforward – addressing the pavement tax would help make it so. We urge that as government progresses its review of the cost of public EV charging, equalising VAT should remain on the table regardless of this ruling.”

John Lewis, CEO of on-street charging firm Char.gy, said the decision “sends entirely the wrong signal to the millions of people who rely on public charging”.

He added: “While home charger users pay 5% VAT, drivers without a driveway – disproportionately those in cities, renters and lower-income households – continue to be penalised at 20%.

“The Government talks about accelerating EV adoption, yet is actively choosing to maintain a tax structure that makes public charging more expensive than it needs to be and undermines the transition. Char.gy stands ready to pass on any VAT saving to our customers the moment the Government does the right thing. The question is: what is the Government waiting for?”

Electric Vehicles UK CEO Tanya Sinclair condemned the decision, arguing that drivers without off-street parking are unfairly penalised for their living situation. She claimed that HMRC’s appeal proves the Government is “choosing to defend that inequality” rather than fixing it.

And Warren Philips, campaign lead for the FairCharge lobbying group, said: “By appealing [the ruling], the Government is telling 1.4 million current EV drivers, and more than 30 million who will have to switch, that it is willing to go to court to keep public charging costs high. It should accept the ruling and work with consumers and industry to put this right.​​​​​​​​​​​​​​​​”